Kurri Veerareddi and Others vs Kurri Bapireddi and Another

Arnold White, C.J.—In this case I have come to the conclusion, though not without some doubt, that our answer to the question which has

been referred to us should be in the affirmative.

There is much to be said in support of the view that notwithstanding the express words of Section 54 of the Transfer of Property Act, it is

inequitable to apply the section as against a party who is in possession and who, if he had sued for specific performance of the contract to sell,

would have been entitled to a decree.

On the other hand in dealing with the question which arises in this case, I think it is legitimate to take into account the considerations of public

policy on which the requirements laid down in Section 54 of the Transfer of Property Act are based. In enacting Section 54, it was, I take it, the

intention of the Legislature, by means of compulsory registration to minimize as far as possible the chances of litigation and to reduce the

opportunities for perjury in connection with sales of Immovable property.

The application of the strict letter of the law untempered by equitable consideration may, no doubt, at first, result in hardship to individuals. But

as soon as it is known to be well settled that the strict letter of the law will be applied, cases of individual hardship will cease to occur, and full

effect will be given to the considerations of public policy on which the enactment in question is based.

The application of the letter of the law leads to certainty of title and to a diminution of the opportunities for perjury. The tempering of the letter of

the law by recognizing equities which would take a case out of the statute, leads in precisely the opposite direction.

The terms of the enactment in connection with the requirement of a registered instrument, are perfectly clear and unambiguous. Section 54 of the

Transfer of Property Act defines ""sale"" as a transfer of ownership in exchange for a price paid or promised, or part paid and part promised, and

the section then proceeds to enact that, in the cases mentioned the transfer can be made only by a registered instrument.

The section further provides that a contract for sale ""does not, of itself, create any interest in or charge on"" Immovable property. We are asked

to read this provision as enacting by implication that a contract for sale coupled with possession, does create an interest in or charge on the

property, even although the requirements of the section with reference to a registered instrument have not been complied with. Such a construction

seems me to be altogether inconsistent with the express enactment in the earlier part of the section.

The object of the provision, as it seems to mo, was to prevent the question being raised as to whether the law of England as to the legal effects

of a contract of sale see for instance, Edwards v. West L.R. 27 Ch. D. 394, In re Adams and The Kensington Vestry L.R. 27 Ch. D. applied in

this country.

The Transfer of Property Act purports to codify certain parts of the law relating to the transfer of property by act of parties and it is not in

accordance with sound canons of construction or with public policy to real into such an enactment propositions of equity which have been laid

down with reference to some other enactment not altogether in pari materia. The English Courts are bound by decisions in connection with the

Statute of Frauds, which are based upon the ""equity of statute.

We are not so bound, and I do not think we are under any obligation in law to engraft these decisions, whenever they can be said to be in

point, on to the enactment in question ; and on grounds of public policy, 1 do not think it desirable to do so. Here we have more or less a clean

state. In England it is otherwise. In dealing with the principles of equitable construction? Mr. Maxwell observes (Maxwell on the ''Interpretation of

Statutes,'' 4th edition, p. 390):

This principle of equitable construction has, however, fallen ""into discredit. It was condemned, indeed, by Lord Bacon, who "" declared that non est

interpretatio sed divinatio quce recedit a ""litera : Lord Tenterden lamented it and pronounced it dangerous; ""and it may now be considered as

altogether discarded as ""regards the construction of most modern statutes. Statutes are ""now to be considered as framed with a view to equitable

as well ""as legal doctrines."" In connection with the question of public policy, I may cite the following passage from Story''s. Equity Jurisprudence''

(see Story, para. 765 on p. 505).

It must be admitted that the exceptions thus allowed do ""greatly trench upon the policy and objects of the Statute of ""Frauds; and, perhaps, there

might have been as much wisdom ""originally in leaving the statute (o its full operation, without ""any attempt to create exceptions, even in cases

where the statute ""would enable the party to protect himself from a performance ""of his contract through a meditated fraud. For even admitting

that such cases might occur, they would become more and more ""rare as the statute became better understood; and a partial evil ""ought not to be

permitted to control a general convenience. ""And, indeed, it is far from being certain that these very exceptions do not assist parties in fraudulent

contrivances and increase ""the temptations to perjury, quite as often as they do assist them ""in the promotion of good faith and the furtherance of

justice. ""These exceptions have also led to great embarrassments in the ""actual administration of equity; and although in some cases ""one may

clearly see that no great mischiefs can occur from ""enforcing them, yet, in others, difficulties may be stated in their ""practical application which

compel us to pause and question ""their original propriety.

The Indian authorities upon the question raised in this case are in conflict.

In Ukku v. Kutti ILR Mad. 401 this Court laid down the broad proposition that whatever right a party in the position of the defendant in the

present case could assert as plaintiff, was also available to him as a ground of defence. In Ittappan v. Parangodan Nair ILR Mad. 91, the plaintiff

brought his suit in ejectment before the expiration of the time within which the defendants might have sued for specific performance of the contract

to renew the lease. This Court held that to allow the plaintiff to eject the lessee would be to give the plaintiff a decree in fraud of his contract of

lease.

In this case the learned Judges dissented from an earlier decision in Papireddi v. Narasareddi ILR Mad. 646 in which there had been an oral

contract for sale, possession given to the defendant, and part payment of the purchase money made, but the Court held that the vendor was

entitled to evict on the ground that there had been no registered instrument. The point was considered by Sir Bhashyam Ayyangar in the course of

his judgment in Ramasami Pattar v. Chinnan Asari ILR Mad. 449. The learned Judge (p. 466) after referring to the law of England under which, in

certain cases, a Court of Equity would act on the supposition that what ought to be specifically performed had been performed and give relief on

that supposition, observes that the same course may be adopted in this country ""as in fact it is in cases in which it can be done without contravening

the express and fundamental provisions of the Transfer of Property Act or of any other positive enactment.

In Achutan Nambudri v. Roman Nair 13 M.L.J. 217, it was held by this Court that the fact that the party in possession was in a position to

enforce specific performance of the contract, was no defence to an action of ejectment, if the requirements of the Transfer of Property Act with

regard to the registration had not been complied with.

The case Karalia Nanubhai v. Mansukhram ILR 24 Bom. 400 may perhaps be distinguished on the ground that in that case the purchaser''s

title was perfected by a registered conveyance which was executed before the case was decided by the Court of First Instance. Lalchand v.

Lakshman ILR 28 Bom. 466 is a clear authority in support of the view (although as a matter of fact there had been in that case a suit for specific

performance by the defendant which was dismissed) that in a case like the present the express provisions of the statute must prevail.

In Begam v. Muhammad Yakub ILR All. 344, a Full Bench of the Allahabad High Court took the same view as was taken by this Court in

Ittappan v. Parangodan Nair ILR Mad. 291, subject to this limitation that the defendant must prove that he had at a proper time and place

tendered a proper conveyance of the property to the seller (the report says ""purchaser"" but this is an obvious misprint) for execution by him (see p.

850).

In the course of the judgment of the Privy Council in Immudipattam Thirugnana Kondama Naik v. Periya Dorasami ILR Mad. 377, an

observation was made (p. 384) which, no doubt, supports the view that in a case like the present the defendant had a good equitable defence

notwithstanding the fact that the requirements of the Transfer of Property Act have not been complied with. In dealing with the contention raised

before the Judicial Committee that, though the mortgage in question fell short of an actual transfer, it showed a good contract for one, and that the

defendant could call upon the plaintiff to ""implement"" the contract, their Lordships observe that if such a right existed it would be an answer to the

plaintiff''s claim and the exact form in which it could be enforced, need not be considered. From the language of the judgment it would seem that

their Lordships had present to their minds the Scotch law of implement. This is part of the ordinary jurisdiction of Scotch Courts, whilst in England

the remedy of speeific performance is a matter of discretion, and defences are admitted which would be inadmissible according"" to the doctrines

and practices of the Courts of Scotland. See Brodie Innes'' ''Corporation Principles of the laws of England and Scotland.'' p. 763.) This being so,

it may perhaps be said that the observations do not affect the present case. But however, this may be, the observations are obiter and I do not

think they preclude us from holding that effect cannot be given to the equities in the defendant''s favour in the present case in contravention of the

express provisions of the Transfer of Property Act.

We have to choose between laying down a rule which, in every case in which a purchaser is in possession under an oral or unregistered

agreement and the vendor seeks to eject him, will involve an enquiry as to whether the circumstances of the particular case are such that the

defendant is entitled by way of equitable defence to a decree for the specific performance of the oral or unregistered agreement, and the rule that in

all cases the express words of the statute must prevail. I do not think we are precluded by authority from adopting the latter rule, which carries out

what appears to have been the intention of the Legislature and seems to me to be in accordance with public policy.

I would answer the question which has been referred to us in the affirmative.

Subrahmania Ayyar, J.

The undoubted policy of the law as enacted by Section 54 of the Transfer of Property Act, was to secure the public register of, inter alia, sales

of Immovable property of the value of Rs. 100 and upwards. The provision in the section that a contract for sale does not of itself create any

interest in or charge on such property, was to guard against that policy being defeated, as it would obviously be, if the principle that equity takes

that as done which ought to have been done, could be invoked in favour of a party who has not secured the proscribed registered proof of his

purchase. This being so, it would follow that in a suit like the present in ejectment by the plaintiff, whose title is admitted, the defendant cannot

succeed by merely setting up a contract on the part of the plaintiff with himself to sell the disputed land, and showing that that contract is specifically

enforceable. To hold otherwise would be to ascribe to the contract the very effect denied to it by the statute in the most explicit terms, Nor is there

ground for saying that part performance by delivery of possession, would warrant the same being relied on as a valid defence to such an action.

The charge provided for by Section 55(6)(b) of the Transfer of Property Act in favour of a purchaser paying the price or a portion thereof, when

considered with the absence of any provision for the case of part performance by delivery of possession, shows that the latter was not intended to

give rise to any interest in the property in the buyer, more especially as a sale of Immovable property less than Rs. 100 in value may be made by

delivery alone. This aspect of questions such as the present has been either not sufficiently attended to or altogether lost sight of in the decisions in

this country relied on to the contrary.

It was however urged that to allow a seller who has so far acted upon the contract as to let the buyer into possession pending the execution of

the conveyance, to eject him when he is not in fault, is to enable the former to act in fraud of his contract and that as the Courts of this country are

Courts both of law and equity the decisions just referred to ought to be followed on the analogy of the rule of equitable construction adopted in

regard to the Statute of Frauds. But as pointed out in Ramasami Pattar v. Chinnan Asari ILR Mad. 449, such a mode of construction has been

disapproved of by high authorities and can no longer be resorted to in dealing with clear and unambiguous provisions of modern statutes like those

in question (see Maxwell on ''Interpretation of Statutes, 3rd edition, pp. 862, 363). A remarkable instance of the refusal by the English Courts

virtually to modify imperative statutory provisions on the ground of equity however clear, is Young & Co. v. The Mayor and Corporation of Royal

Leamington Spa L.R. 8 A.C. 517. There an urban authority governed by Sub-section (1) of Section 174 of the Public Health Act, 38 and 39

Vict., Order 55, which provides that ""every contract made by an urban authority whereof the value or amount exceeds �50 shall be in writing

and sealed with the common seal of such authority,"" was hold not liable under an executed contract of which they had had the full benefit, because

the contract was not under seal. In the Court of Appeal Lindley, L.J., observed : ""It may be that this ""is a hard and narrow view of the law; but my

answer is that ""Parliament has thought it expedient to require this view to be ""taken, and it is not for this or any other Court to decline to give ""effect

to a clearly expressed statute, because, it may lead to ""apparent hardship."" Alluding to the same point Lord Blackburn in the House of Lords said :

It is true that this works great ""hardship upon the now appellants. They had an agreement but ""it was not sealed; and though it is possible that if the

agreement ""had been under seal the defendants might have established a ""defence on the merits to all or part of what is claimed; it is hard ""on the

appellants that they should not be allowed to raise the ""question. It is, however, for the Legislature to determine ""whether the benefits derived by

enforcing a general rule are or ""are not too dearly purchased by occasional hardships. A Court ""of Law has only to inquire - What has the

Legislature thought ""fit to enact?"" This was of course as strong an instance of hardship, nay, injustice to the appellants in the case, as can be

imagined, for, though they had executed their part of the contract, they lost everything and were remediless, while here the effect of the view we

are taking would only be to make the defendant resort to his proper remedy, viz., a suit for specific performance in order to complete his title.

No doubt the same result could be attained in this very suit it the law of procedure in this country permitted the Court to enforce specific

performance on a counter-claim by the defendant. That however it does not. But even as the law stands in this respect, the defendant could have

saved himself from all difficulty had he made the claim for specific performance the subject of a separate suit pending this action in ejectment, for,

then, the disposal of the latter might have been postponed until the result of the other suit was known or the two actions dealt with together and

decided with reference to the success or failure of the claim for specific performance. Be this as it may, the right doctrine would seem to be that

applied in Achutan Nambudri v. Koman Naik 13 M.L.J. 217, with reference to the instance of mortgage there in question, following Papireddi v.

Naratareddi ILR Mad. 464 and Ramasami Pattar v. Chinnan Asari ILR Mad. 449. But it must be admitted that the observation in the judgment of

Lord Hobhouse in Immudipattam Thirugnana Kondama Naik v. Periya Dorasami L.R. 28 IndAp 46 seems to go far to uphold the contention that

the contract for sale may be set up as an answer to a suit in ejectment such as the present. This opinion cannot however be taken to be an actual

decision. It is by no means clear, that the circumstance that a definite period of limitation is prescribed for the enforcement of a claim for specific

performance in this country, was present to the mind of his Lordship. Now, in the view suggested by him, the defence will have to be allowed, in all

cases where the light to specific relief is not barred by limitation, when the defendant enters on his pleading. But this period of limitation may expire

pending the suit, and if the suit results in its dismissal, the defendant would either win but to be dispossessed in a fresh suit or obtain a title

notwithstanding he has no registered conveyance as prescribed by law. It is difficult to believe that the framers of the Transfer of Property Act

contemplated that such a state of things could be rightly brought about.

I would therefore answer the question submitted in the affirmative.

Benson, J.

I am of opinion that our answer to the question referred for our decision must be in the affirmative.

As shown in the order of reference, this Court has taken different views at different times according as it looked at the question mainly from the

legal or from the equitable point of view. The true rule, however, seems to be that where the words of a statute are clear and unambiguous it is the

duty of the Courts to give effect to them, and not to allow the statute to be made of no effect by introducing what may appear, in particular cases,

to be equitable considerations, but which, in the long run, are more likely to lead to inequities and litigation and perjury than if it is known that the

letter of the written law will be consistently enforced in all cases. As observed by the Privy Council in the case of Gokul Mandar v. Pudmanund

Singh L.R. 29 IndAp 196. ""The essence of a Code is to ""be exhaustive on the matters in respect of which it declares the ""law, and it is not the

province of a Judge to disregard or to go ""outside the letter of the enactment according to its true ""construction.

Now u/s 54 of the Transfer of Property Act a sale of Immovable property of the value of Rs. 100 and upwards can be made only by a

registered instrument, and the section expressly enacts that a contract for sale ""does not, of itself, create any ""interest in, or charge on such

property."" It is argued, however, that the contract for sale, accompanied as it is in the present case by delivery of possession, that is by a part

performance, does give the purchaser a lien on the property and such an interest as is sufficient to enable him to resist a suit in ejectment by the

vendor. No doubt there is an observation of the Privy Council in the case of Immudipattam Thirugnana Kondama Naik v. Periya Dorasami ILR 24

Mad. 377, which lends support to this contention but I do not think that it is more than an obiter dictum. There is nothing in the Transfer of

Property Act to support the contention, and the fact that no lien on or interest in the property is given by the Act in such a case, while a charge is

expressly given by Section 55 (6)(b) in the case of part performance by payment of the price, or portion of the price, leads very clearly to the

inference that the Legislature did not intend that delivery of possession should, like part payment, create a lien on, or an interest in, the property. To

hold otherwise would nullify the policy of the Act, and give dishonest persons an opportunity for evading its requirements. On the other hand to

hold that a contract for sale even when accompanied by delivery of possession does not create a lien on or an interest in the property, does not

lead to any real hardship, for the purchaser can resort to his proper legal remedy by instituting a suit for specific performance of the contract - a

remedy to which, he must, in any case, resort in order to complete his title and secure legal evidence of it - and he can then apply to have the trial

of the ejectment suit stayed pending the trial of his own suit for specific performance.

Looking to the express terms and to the manifest policy of the Transfer of Property and Registration Acts in force in India, I think that our

answer to the reference should be in the affirmative.

The appeal came on for final hearing before (Subramania Ayyar and Sankaran Nair, JJ.), when the Court delivered the following

JUDGMENT

Following the Full Bench ruling we dismiss the second appeal with costs.

The memorandum of objections is also dismissed with costs.